The title of this blog, "When's The Market Going To Come Back", is a question I get ALL of the time. As someone involved in home building, remodeling and real estate I am looked to as an authority on the subject (and I'm very thankful and flattered for that). The last question happened Sunday while I was eating lunch with my family at Chipotle (love their service, pricing, quality and the lime chips - www.chipotle.com). We ran into a family and my younger daughter goes to school with the three kids (they are triplets). We got to talking about ballet, The Nutcracker and middle school. The mom looked at me and inquired about a listing I have where we live (www.6265dublingranville.com) as to its price, why the people were selling, etc. All of the typical questions. I answered them all and invited her to see the home to which she said that she wasn't moving but did want to see it. Open House coming up so I invited her (and all of her friends).
We finished our conversation and said our pleasantries and our goodbyes and then they left. Then all of a sudden from the table behind where they were sitting I hear "when's the market going to come back"? I looked over and saw a lady sitting by herself. Nothing particular stood about this lady; she was dressed very casually (it was Chipotle), didn't have any makeup on (yes, I could tell from twenty feet), had somewhat of a smoker's voice and I was quite surprised she spoke up. However, I learned a long time ago that you just never know...
I responded with "that depends a lot on where you live and at what price point your home is currently at". She looked at me and said "that's fair, we live on R***** Court in N** A*****". She lived in a home that was close to the seven figure mark. That piqued my interest; I almost broke my own golden rule of you never know...
We chatted in great length about the area in general, her specific part of the neighborhood, her price point, when she bought her home, why she wanted to sell (her only son was already in college) and that they actually wanted to build another home in the area but much, much smaller (they have about 7000 SF now), what business she and her husband were in (they were - multiple - business owners), etc. So after about ten minutes of a very nice and engaging conversation she looked at me and said "soooooo, when's the market going to come back"? I chuckled not at her question but at her persistence. I am learning more and more almost everyday that people just want to know when they won't lose money on their homes. I gave her a very quick response of "2-5 years based on the inventory on the market along with the development that's currently happening". She was shocked to say the least.
I put up my hand and smiled and said "wait, don't get mad at me let's just look at the numbers". I proceeded to explain to her the current inventory and its pace of sale and how that will relate to the market coming back. Then I said something that shocked her even more: I stated that the market coming back was much more of a mental measurement than a calculated measurement. Here's why: people will take action based more on what they perceive to be happening as opposed to what may actually be happening. Don't believe me? Take for example the real estate market five years ago when things were BOOMING. People bought homes as an investment that they were convinced would appreciate by 10% a year, year on year. The statistics showed them that it was impossible to maintain that growth but they did it anyway because they BELIEVED that it was true.
So here's my answer for today: the market comes back in 3-5 years but for right now, we will see "the new normal" in 1-2 years. What's the new normal? People having the confidence to purchase a home and knowing they won't lose, or make, 10% a year on it.
My conversation companion looked at me and said "that makes sense and it really works for us. Our son will be out of college and that's perfect timing for us. Give me your card because I would like you to meet with my husband and me to continue the conversation". I couldn't ask for anything more.
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